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Issues: Whether the Assessing Officer and Commissioner (Appeals) were right in treating the assessee as an assessee in default and levying/confirming liability under section 206C(6A) read with section 206C(7) of the Income-tax Act, 1961 and in rejecting the assessee's rectification application under section 154 of the Income-tax Act, 1961.
Analysis: The dispute concerns collection and payment of tax collected at source (TCS) on scrap sales for AY 2012-13. The assessee filed Form 27EQ returns for all four quarters and furnished reconciliation showing how amounts in the TCS return correspond to the audited profit and loss account after adjustments (including treatment of roll scrap and duties and taxes). The Assessing Officer proceeded to pass an order under section 206C(6A) read with section 206C(7) without providing opportunity of hearing and treated certain amounts as uncollected TCS. The assessee also filed an application under section 154 to rectify apparent mistakes which was rejected; a penalty under section 271CA was later passed. The Tribunal examined the return filings, the reconciliation submitted by the assessee, and the record of payment and collection of TCS and found that the assessee had accounted for and/or collected TCS on the relevant sales and had filed the requisite returns; the AO and CIT(A) did not correctly appreciate the reconciliation and the correspondence between TCS returns and the audited accounts. The Tribunal also noted procedural infirmity in the lack of hearing before confirming the demand and the rejection of the rectification request without adequate consideration of the reconciled evidence.
Conclusion: The appeal is allowed; the Assessing Officer's order under section 206C(6A) read with section 206C(7) and the rejection of the rectification application under section 154 are set aside and the demand is deleted. This conclusion is in favour of the assessee.
Final Conclusion: The Tribunal's decision restores the position shown in the assessee's TCS returns and reconciled accounts and relieves the assessee of the contested TCS demand and related penalty, confirming that where TCS is shown as collected and reconciled in returns and accounts, demand under section 206C(6A) read with section 206C(7) cannot be sustained.
Ratio Decidendi: Where the assessee files TCS returns showing collection and furnishes a reconciliation with audited accounts demonstrating collection/payment, a demand under section 206C(6A) read with section 206C(7) cannot be sustained absent clear evidence of non-collection, and rectification under section 154 must be considered in light of such reconciled evidence.
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